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Regulators Close Seven Community Banks

Seven regional banks were shut down on Thursday - one in Texas and six in Illinois - bringing the number of ""failed banks in 2009"":http://www.fdic.gov/bank/individual/failed/banklist.html to 52. Barely half-way through the year, and that number is already more than double the 25 institutional failures in 2008.
So far, twelve banks in Illinois have been shuttered this year, but Thursday's closing represents the first 2009 failure in Texas.
Altogether, last week's seven closings are expected to set the FDIC back an estimated $314.3 million. The agency's Deposit Insurance Fund has taken a $12.3 billion hit from failures this year.
""Millennium State Bank of Texas"":http://www.msboftexas.com, based in Dallas, was closed by the Texas Department of Banking. ""State Bank of Texas"":http://www.statebnk.com in Irving, Texas, agreed to acquire all of Millennium State Bank's $115 million in deposits and $118 million in assets, and will operate the failed bank's sole office under the State Bank of Texas name. Millennium's closure will cost the FDIC $47 million.
According to the FDIC, the six failed Illinois banks are all controlled by one family and followed a similar business model that created concentrated exposure in each institution. The agency said the failure of these banks resulted primarily from losses related to the banks' investment in collateralized debt obligations and other loan losses.
""Founders Bank"":http://www.foundersbank.com in Worth, Illinois, was the largest institution to be closed on Thursday. Founders Bank had total deposits of approximately $848.9 million and total assets of $962.5 million. ""The PrivateBank and Trust Company"":http://www.theprivatebank.com in Chicago paid a premium of 1.5 percent to acquire all of the failed bank's deposits. PrivateBank also agreed to purchase approximately $888.4 million of Founders' assets and take over its eleven branch offices. The FDIC and PrivateBank will share any losses on approximately $617 million of Founder's assets. Founder's failure will cost the FDIC $188.5 million.
The Office of the Comptroller of the Currency (OCC) shut down the ""First National Bank of Danville"":http://www.fnbdanville.com, in Danville, Illinois. ""First Financial Bank, N.A."":https://www.first-online.com, based in Terre Haute, Indiana, acquired all of First National's $147 million deposits for a premium of 5.36 percent. In addition to assuming all of the deposits of the failed bank, First Financial agreed to purchase approximately $148 million of its assets, of which the FDIC will share in the losses on approximately $97 million. First Financial will also take over the now-defunct bank's seven branch offices. The failure will cost the FDIC's insurance fund $24 million.
""Elizabeth State Bank"":http://www.elizabethstatebank.com in Elizabeth, Illinois, was closed by state regulators. ""Galena State Bank and Trust"":http://www.galenastate.com, based in Galena, Illinois, agreed to acquire Elizabeth State Bank's two branches and $50.4 million in deposits for a premium of 1.0 percent, as well as $52.3 million in assets. The FDIC and Galena State Bank and Trust entered into a loss-share transaction on approximately $44.5 million of the assets. The FDIC estimates that the cost to its Deposit Insurance Fund for the failure will be $11.2 million.
""Rock River Bank"":http://www.rockriverbank.com in Oregon, Illinois, was also shut down by state regulators. FDIC entered into a purchase and assumption agreement with ""Harvard State Bank"":http://www.webhsb.com of Harvard, Illinois, to assume all of Rock River Bank's $75.8 million in deposits for a 2.0 percent premium. Harvard State Bank also purchased $72.9 million of the failed institution's assets, of which the FDIC agreed to share in the losses on $51.3 million. Harvard State Bank has assumed operations of Rock River's four branch offices. The failure is expected to cost the FDIC $27.6 million.
""First State Bank of Winchester"":http://www.fsbwin.com, Illinois, has been acquired by ""First National Bank of Beardstown"":http://www.beardstown.net, Illinois. First National Bank of Beardstown assumed First State Bank of Winchester's $34 million deposits for a premium of 2.0 percent and has taken over the failed bank's two branches. First National Bank of Beardstown also acquired $33 million in assets, and entered into a loss-sharing arrangement with the FDIC covering approximately $20 million of the purchased assets. The FDIC estimates that the failure with cost its insurance fund $6 million.
""John Warner Bank"":http://www.johnwarnerbank.com in Clinton, Illinois, was also closed by state regulators. ""State Bank of Lincoln"":http://www.sblincoln.com, Illinois, has assumed all of John Warner's $64 million in deposits for a premium of 4.1 percent. In addition, State Bank of Lincoln agreed to purchase approximately $63 million of assets. The FDIC will share in the losses on approximately $31 million. The three offices of John Warner Bank have reopened as branches of State Bank of Lincoln. The closure will cost the FDIC an estimated $10 million.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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